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Deep dive into American's wallets · The Financial Exchange Show

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Speaker 2: Chuck, Mike and Tucker with you as we kick off
1:15
the second hour the show. We got markets that are
1:18
in the green, but pairing some of their earlier gains
1:23
from the open. The Dow is now three hundred and
1:26
ninety two points, still up about one percent. SMB's up
1:29
thirty three, its gains cut in half over the course
1:32
of the day, was up over sixty at one point,
1:34
NASDAG up sixty points, only about a third of a
1:36
percent today, but all three major US indices still in
1:39
the green, which is a welcome site after not a
1:43
very good Friday. The ten year US Treasury at the
1:46
moment basically flat, up two tenths of a basis point
1:50
to three point seventy one to two percent. Oil today
1:53
is up eighty six cents a barrel to sixty eight
1:55
to fifty three, still hanging out in the high sixties
1:58
for a couple days here and as a result the
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TRIPA national average for gas prices down another three tenths
2:04
of ascent over night to three twenty seven a gallon nationally.
2:08
Remember about a month and a half ago, we were
2:10
kicking around the three fifties, so gas prices continuing to
2:13
slide as we head into the fall.
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Speaker 3: Here.
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Speaker 2: Finally, we've got gold today up a dollar sixty ounce
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to twenty five, twenty six and twenty cents, and those
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are the major market moves that we are seeing. Mike,
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there is a piece today in the Wall Street JOURNALI
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It's titled the State of America's Wallets, And it's not
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asking like have you had your wallet for ten years?
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And is it beat up? Look like Costanzas, But instead
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it's saying, Hey, what are Americans you know, sitting on
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in terms of cash and things along those lines, What
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do Americans have an outstanding credit card debt? And things
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that you would you know, pick up in uh, you know,
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your wallet? And what are we seeing as far as
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changes and trends and things like that.
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Speaker 3: There was a literal one in here that I found
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to be just a I don't know, interesting but kind
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of useless statistic, which was Americans carried an average of
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seventy four dollars in cash in their wallets and purses
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in twenty twenty three, which is up from sixty dollars
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in twenty nineteen, So I guess that speaks to inflation.
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But in a increasingly cashless society, I'm not sure that
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it matters how much cash the average person is carrying
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in their back pocket.
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Speaker 2: You guys in the same boat, you carry a little
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bit of cash with you at all times most of
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the time. Not gold bars, no coins, a lot of
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plastic you know, plastic bars toonies. Yeah, I mean, just
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an increasingly an important one in my view, but nonetheless interesting.
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So one piece they looked at was wages. I would
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say that that's arguably the most important piece in this
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entire article is how have wages done over the last
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few years, And unsurprisingly they're up. Weekly pay is sitting
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at one one hundred and fifty one dollars. That's the median.
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I believe it's up twenty three percent from twenty nineteen.
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So what that actually means is that median earnings we're
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about three and a half percent higher in the second
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quarter of twenty twenty four compared to the beginning of
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twenty nineteen. That's inflation adjusted dollars three and a half
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percent higher than where they were back in twenty nineteen.
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In one regard, that's you know, an improvement on where
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we were back in say, twenty twenty two, when wages
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had not been keeping pace. In another it means that we've
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made you know, average households made just a tiny bit
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more than inflation over the last few years. But again,
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look at that over the long term trend. I think
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that's actually quite the improvement bank accounts. According to data
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from the JP Morgan Chase Institute, the median bank account
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meaning again fifty percent of balances or higher fifty percent
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are low, or the median bank account balance is three
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ninety one dollars. That's still up fourteen percent from twenty nineteen,
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but obviously down from the twenty twenty one highs of
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north of five thousand shortly after the last round of
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stimulus checks went out. This is one of those numbers that,
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when cited, I think people read it a couple different ways.
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I actually view this as, you know, something that I'm
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pretty optimistic.
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Speaker 3: About, that bank account balances are up fourteen percent.
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Speaker 2: Not even that they're up more than half of households
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have at least three thousand dollars in the bank. Yeah, Like,
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that's not like we always hear these, you know, surveys
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like Hey, X number of people can't you know, pay
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for a four hundred dollars this and that.
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Speaker 3: Actually, I'm gonna take the other side of this. I'm
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not sure I'm convinced of that that being the case.
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So they're taking a look at you know, median accounts. Yeah,
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if you're a wealthier household, you're gonna have more accounts.
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But this is median, Like, how many accounts does a
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wealthy household have I don't know, but two hundred No,
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but arguab twice as many as a poorhousehold. I don't know.
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I'm genuinely asking because I'm not sure, And so I
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wonder if that is bringing up the median.
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Speaker 2: Oh no, So this is this is on a per
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person basis. This is per person that they're looking at.
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Speaker 3: Then that's good.
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Speaker 2: So I look at that, and I say, look, that's actually,
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you know, not bad. If you want the bad side
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of it, it's the credit card balances have continued to
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rise and delinquencies have continued to rise.
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Speaker 3: I'm gonna again take a look at the other side
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of this. So balances now for people that carry a
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balance month to month up to six two eighteen dollars
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in the first quarter. Well, know, that's bad, right, let's
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start there. It's bad, but it was at fifty eight
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hundred bucks at the end of twenty nineteen.
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Speaker 2: Here's why.
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Speaker 3: It's in a six and a half percent increase over
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that time period. And I guess on my point it
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would be well, prices are up well more than six
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and a half percent, but on the other hand, wage
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tis are up three and a half percent, so that
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should allow you to pay down that credit card debt.
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Speaker 2: And the interest rate some of these are higher now.
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So instead of interest being seventeen percent on average, it's
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now twenty three percent. And so you, like, you do
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the math out and you're like, okay, seventeen percent of
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six thousand we are talking. You know, you're paying you know,
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nine hundred and fifty nine hundred and seventy dollars a month,
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I'm sorry a year in interest before Now you're paying
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somewhere around fifteen hundred bucks a year in interest.
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Speaker 3: The other bad part of this slightly more than half
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of credit card users in twenty nineteen we're paying off
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their balance every month. Now slightly half slightly more than
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half are carrying a balance a month of a month.
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Speaker 2: Yeap, So that not really a great sign there. Let's
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see you wanta talk car ownership, I'd prefer not to
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because the data is just awful, quite honestly. So you've
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got higher car loan interest rates and vehicles have gotten
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more expensive, and so now you end up with people
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having to hold onto their cars longer, and the ones
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that are replacing them more often have just astronomical mon
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monthly bills that they are spending in order to buy vehicles,
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and auto insurance has gone through the roof as well.
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The car picture is kind of gross right now. Quite
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like I got a shower after reading some of the data. Yeah,
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we're just really bad at that decision. We are, we are,
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And you got delinquencies. This is one of the other
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areas where delinquencies are moving up. It's really credit cards
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and auto loans where you're seeing the vast majority of
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the movement. Neither one of those is a big enough
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area to cause the US economy any meaningful trouble, but
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they are areas that can absolutely cause individual households a
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lot of trouble. Yeah, and the car piece is really
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kind of concerning right now.
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Speaker 3: I mean, we've been covering too the increasing number of
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car owners who are just going without insurance right now
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is another piece to this too. This isn't covered in
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this piece, but we covered a few weeks ago where
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increasingly frankly, because car insurance rates have gone crazy over
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the last few years. I don't remember where that landed
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in terms of inflation over the last several years, but
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through the roof, in terms of the cost of insuring
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your car, you've now got more uninsured drivers on the road.
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What does that do in amo among many other things
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of you know, causing potentially more hit and runs and
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all sorts of problems. It drives up insurance costs for
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the people that do ensure their car is even higher
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and faster.
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Speaker 2: Which is not good.
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Speaker 3: No, because all of us have that rider on our
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vehicle insurance. I think it's required to Massachusetts that you
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have insurance against uninsured drivers.
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Speaker 2: And finally, housing also ridiculously expensive right now.
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Speaker 3: True, but it's the only one that I can look
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at to say, I mean, you know, mortgages and things
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like that have gotten more expensive, but home equity one
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area I can look at to say dramatically improved over
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the last five years.
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Speaker 2: The problem is that most people don't want to tap
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their home equity right now because interest rates have been
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so high. We'll touch on how interest rates coming down
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may shift the thinking on that over the next couple
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of years, and how that could be something that acts
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as nice little counterbalance to some of the slowdown that
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we've been seeing in the US economy recently. But people,
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it's it's one thing a few years ago when you
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could say to someone, Hey, you're thinking about this project,
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what about a home equity line of credit or a
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home equity loan where yeah, you're paying three or four percent.
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Oh yeah, that sounds great. Earlier this year, Hey homech
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not even earlier this year. Earlier this week, Hey, home
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equity line of credit? You could you could get one
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and you're paying eight and a half percent. No I'm
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not gonna do that. No, thank you like that? That
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sounds not great. So we'll talk about how this may evolve,
10:35
because I do think this is one of the key
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things to watch as we go through the next several years.
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Speaker 2: All right, Mike, let's talk a little bit about this
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piece from Connorson and Bloomberg Opinion. It's titled Americans have
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a new piggybank to raid their houses. We're talking last
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segment about the idea of Hey, as interest rates come down,
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home equity loans can start to, you know, look attractive
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to people who may be considering projects and things along
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those lines. And this piece really gets at the core
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of that in that, Hey, right now, Americans have just
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a monumental amount of equity in their homes at the moment.
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I was looking at data just a minute ago, actually,
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and this is from our friend Mike Simonson at Housing
11:52
Wire and all this research. One point eight percent of
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mortgages right now have negative equity. That is the lowest
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percentage of underwater homes in history.
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Speaker 3: Yeah, I'm trying to I'm struggling to imagine what home
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has negative equity right now.
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Speaker 2: It must be the last year or two probably, I guess, Yeah,
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it has to have been. I mean, think about how
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prices have moved up. Like I'm gonna say, it has
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to be bought in the last home and in one
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of like eight states. Yeah, it's got to be. Hey,
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I bought it last year in Austin, Texas or something
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like that with two percent down right exactly. It's it's
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something like that. The vast majority of homes have I
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mean again, even other things that you're seeing here, fewer
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than five percent of homes have under eighty percent loan
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to value ratio. So there's a ton of equity in
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homes at the moment. And if there's one thing that
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I believe more than anything else about Americans in their
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financial habits, and this is neither good nor bad. It
12:51
just is. When given the ability to borrow golleg willkers,
12:57
we do it like that's what Americans do. I'm not
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saying it's good or bad. It just like it is.
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And most of the time it ends up working out
13:05
fine in the aggregate. Occasionally you run into a two
13:08
thousand and seven, which is not great. Yeah, I wonder
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we haven't seen this tack up a whole lot. Home
13:15
equity line applications, balances. None of that stuff has really
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moved a whole lot. And you can make it an
13:21
easy argument that, hey, that's just because rates have been
13:24
so hi that people don't want to do it.
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Speaker 3: And I'm you know, Paul was in that boat. Actually
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he got a bunch of quotes to redo a porch
13:32
and said at eight and a half percent interest, no,
13:34
thank you, that drops down to five or six. You
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do wonder, but I do wonder also the stigma attached
13:42
to lines of credit and how it just decimated households
13:45
back during the financial crisis.
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Speaker 2: Can I share some data please? So in two thousand
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and this is according to data from the Federal Reserve,
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and they do a I think it's a weekly survey
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they get data on this. Actually, at the start of
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two thousand there was around one hundred billion dollars of
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home equity lines of credit were revolving home equity loans outstanding.
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By the time we got to the peak of the
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financial crisis in March of two thousand and nine, we're
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up to six hundred billion dollars six hundred billion dollars
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the home equity loan. The amount outstanding on home equity
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loans sextupled in a an eight year period, Like it
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was just insane, yep, and we realized, hey, this is
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this is dumb, We shouldn't do this. Over the next decade,
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from two thousand and nine, actually decade plus two thousand
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and nine to February of twenty two, the amount outstanding
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on home equity lines of credit went from six hundred
14:47
billion down to two hundred and forty six. It was
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a net drag just because again, like people were like
14:52
tapped out on this stuff. If you look in the
14:55
last year, though, the amount outstanding on home equity loans
14:59
has gone from two one hundred and fifty three billion
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dollars up to two hundred and fifty eight with a
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meaningful inflection point in June of this year, where we've
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basically been adding a billion dollars in new home equity
15:10
loan exposure on a monthly basis. Now that's remember back
15:15
in the early two thousands, we're adding like eight to
15:17
ten billion dollars a month. We're adding a billion a month.
15:21
So don't get all freaked out at all, like we're
15:23
doing it all again. No, we're moving at like a
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tenth of the pace in a world where stuff is
15:28
three times more expensive.
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Speaker 3: Right, yeah, that's so important caveat there.
15:32
Speaker 2: Yes, but you're already starting to see a little bit
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of an uptick on this, and this, in my humble opinion,
15:39
is actually a fantastic sign for the US economy.
15:44
Speaker 3: Which piece the moving up of the balances, or the
15:47
existence of the equity.
15:48
Speaker 2: The moving up of the balance is because there's so
15:50
much equity, we're we're not in trouble in the housing
15:54
market with people like having to get blown out of
15:58
their homes, with you know, taking big haircuts on short
16:01
sales and stuff.
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Speaker 3: Sure, it's not.
16:02
Speaker 2: A threat here. And so when you see borrowers rightly saying, hey,
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I've got this equity, interest rates have come down and
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I've had a project I've put off for a couple
16:13
of years because rates have been through the roof. Good
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for the family again, all else being equal, assuming like
16:20
they keep their job in Yaudiata, really good for the economy,
16:24
generates economic activity, and it's moving at a pace that's
16:27
not concerning.
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Speaker 3: Yeah, I'll argue about the good for the family piece, right, Like,
16:32
you know, there are plenty of people who would say,
16:34
pay for that project in cash if you're going to
16:36
do it, and and don't manage around that debt. And
16:41
I think that's a reasonable argument to make at the
16:44
household level. But if you're talking about the predictive future
16:48
of the state of the economy, yeah, expanding debt levels,
16:53
I think is a very, you know, tremendously attractive viewpoint
16:58
for the future of the economy.
17:00
Speaker 2: I'm gonna poo pooh the people that say you shouldn't
17:02
do that, take, you know, taking out debt.
17:04
Speaker 4: Yeah.
17:05
Speaker 2: Everyone likes to be like, oh, like, I'm being so responsible,
17:08
and this is the response. It's not irresponsible to use
17:12
debt inherran like, it's not inherently irresponsible to use debt, Like, yes,
17:17
you can do it badly, but that's like saying, hey,
17:20
just because Battlefield Earth was a horrible movie means no
17:23
one should make movies. No, they just made a bad one.
17:27
Speaker 3: I agree that people overstate the don't ever use debt.
17:32
I use my credit card every single transaction, and I'm
17:35
fine with that, But I think there's also probably a
17:39
balancing act there, and would generally be cautious about borrowing
17:44
on your home for anything until you've really thought about
17:48
how that loan is going to be paid back, because
17:51
far too often it doesn't happen. YEP.
17:53
Speaker 2: Taking a look at markets as we had towards the
17:55
bottom of the hour, the Dow is still up three
17:57
seventy six, the S and P's up thirty five, Nasdaq
17:59
up seventy.
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18:35
Speaker 3: Mike.
18:35
Speaker 2: There's a piece in the Wall Street Journal today. It's
18:37
titled when Chasing more dividends leaves You with less? And
18:42
what it gets at is the idea of hey, in
18:47
particular in the twenty tens, but with the idea that
18:50
interest rates might be coming down again, people start to
18:53
look around for Hey, whether what are other ways that
18:55
I can generate income into portfolio, you know, beyond what
18:59
I was doing previously. And so you see these different
19:03
high dividend products that are offered, in some cases not
19:06
even high dividend products just high income where they might
19:09
even be using like an option strategy to try to
19:12
generate income as well. And what's important to pay attention
19:17
to is not just the dividend payout, but also, hey,
19:22
what what kind of total return do you generate? Because
19:26
in some cases you can end up in a situation
19:28
where yes, you might get you know, great dividends that
19:32
help to you know, cover what your you know, expenses are,
19:36
but it's also at the cost of Hey, the principle
19:40
is being kind of whittled away through bad performance from
19:44
the underlying investments, and so you might not actually be
19:47
getting anywhere and it might not be sustainable for you.
19:49
Speaker 1: Yeah.
19:50
Speaker 3: The example is used of one of these that you
19:51
know advertised an eleven percent dividend deal that's seeing a
19:55
negative seventy percent decline so far this year. As an example,
19:59
there's this really runs across not this year. It was
20:02
a decline of seventy percent over the last thirteen years,
20:05
sorry thirteen.
20:06
Speaker 2: Which by the way, is a time that's been really
20:08
good for stocks, right, but not so much for this
20:11
this fun.
20:12
Speaker 3: And so, I mean, there's a few different ways to
20:14
look at this one. Whenever you see something that's advertising
20:19
and paying a rate that far exceeds what you see elsewhere.
20:24
You need to stop and pause and say, give it
20:27
the old sniff test, like, what is happening here? How
20:30
are they doing so? Because I see that the S
20:32
and P five hundred over thirty years has averaged what
20:36
like a two percent dividend?
20:37
Speaker 2: Right, yeah, and like on something like the fun that
20:40
you referenced, they found that again, even accounting for the dividends,
20:45
you still lost nine percent over a thirteen year period,
20:49
where hey, even if you had just taken in again,
20:52
you never know what the returns are going to be
20:54
on any of this stuff, But you say, okay, look
20:56
the market over that time period did significantly better, and
20:59
even if I'm paying capital gains taxed through liquidations, you
21:03
would have ended up in a better spot. Now that
21:04
might be reversed over the next decade because you don't know.
21:08
But just because something is paying you high dividends doesn't
21:11
mean that it still is generating the kind of performance
21:14
that you need for a long term strategy.
21:17
Speaker 3: Or that the share price will remain stable. I think
21:19
there's a far difference between this and say, like, you know,
21:22
there's plenty of funds that track the highest dividend payers
21:25
in the SMP, for example, which you know would still
21:28
pay a higher dividend rate, albeit far less. But even
21:30
in those cases, you might not recognize that, Hey, okay,
21:33
now I have no exposure to, for instance, technology stocks, right,
21:38
very limited exposure, or just exposure to very mature technology stocks,
21:41
which you know, go take a look at a few
21:43
of those. They haven't performed exceedingly well, and so the
21:46
temptation is clear there, and especially in yours. I mean
21:49
the utility sector, for example, has done exceedingly well and
21:51
tends to pay a high dividend rate this year in particular.
21:55
But it comes back to something that I see all
21:59
the time, Chuck, and I know you see it too,
22:01
which is people get caught on one feature of any
22:05
investment product. Yes, look how well it did last decade,
22:08
Look at the dividend rate, look at the price to
22:11
earnings ratio, And fundamentally, I've sometimes dug in and been like, well,
22:16
what is it? What does the company do? What is
22:18
that fund to do, what's its goal? What does it
22:20
attempt to accomplish? And unfortunately frequently the answer is I
22:25
don't know. I saw it on CNBC or I saw
22:27
it on this place or that place and just talked
22:30
about the David, I have no idea what the company does.
22:32
Speaker 2: He ratio is low. What do they do well? They
22:34
sell horses and buggies?
22:35
Speaker 1: Right?
22:36
Speaker 3: So what does require a bit more digging in than
22:40
just the surface of Okay, you know this is what
22:44
this does. And if you can't explain it to say,
22:48
your spouse, it's a pretty good sniff test of like, hey,
22:52
you know, what are we investing in? And do I
22:55
fully understand it. It's not to say that there isn't
22:57
a place for how yield and it and investing. There
23:01
are plenty of circumstances where that makes a ton of sense.
23:04
But it all comes back to understanding what it is
23:07
you're doing. And this really plays into not just investment selection,
23:11
but really every part of the investment process. You ask
23:15
yourself honestly, like when I take a look at my portfolio,
23:17
do I understand what it is that I'm investing in?
23:20
Would the average person consider it to be conservative or
23:24
aggressive or somewhere in between? Why do I own this
23:28
asset over here? What is it doing to help me
23:30
accomplish my goals ten years from now? Like those are
23:34
You don't need to be a chartered financial analyst to
23:38
be able to answer those types of questions about your portfolio,
23:40
and I would argue that everyone should be able to.
23:44
If you are listening to this now and you know,
23:48
just kind of scratch your head saying I'm not sure
23:50
that I could answer those questions about my own investment
23:53
lineup or financial plan. I'd love to introduce you to
23:55
the Armstrong Advisory Group and offer you a free time
23:58
to sit down with us. We have offices throughout New England.
24:01
We take meetings across the country. We can meet via zoom,
24:05
we can talk to you over the phone, we can
24:06
meet with you in one of our eleven or twelve
24:08
offices based here in New England, and we'll do a
24:11
deep dive with you to really understand what it is
24:13
you're trying to accomplish. Sit at the same side of
24:16
the table and provide some feedback for you on okay,
24:18
these are the paths forward and what seems to be
24:21
going well and what might not be going so well.
24:24
If this is ringing true to you, If if that
24:26
type of consultation would be useful, please give us a
24:30
call at eight hundred three nine three four zero zero one. Again,
24:34
we have offices throughout New England, but meet with folks
24:36
across the country and would be happy to sit down
24:38
with you too. That phone number once again, it's eight
24:41
hundred three nine three four zero zero one.
24:45
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
24:47
registered investment advisor. Nothing in the ad or in any
24:50
Armstrong guide a specific financial, legal or tax advice. Consult
24:53
your own financial tax into state planning advisors before making
24:56
any investment decisions. Armstrong may contact you to offer investment
24:59
advisory services.
25:00
Speaker 2: Google about to be going into another anti trust trial, Yes,
25:04
that's right, their second one this year. At least the
25:08
DOJ is saying to Google, hey, you might be anti
25:12
competitive when it comes to your business, but we're not
25:15
when it comes to our anti trust lawsuits, because we
25:18
have two of them, and this one's going to be
25:21
taking place in the Eastern District of Virginia. And the
25:26
premise here is the DOJ is going right after Google
25:29
Ad Manager, which is the platform that Google uses to
25:35
basically take orders for ads coming into websites and then
25:38
place them onto the various websites that use Google Ads.
25:42
Down the road.
25:43
Speaker 3: Not that this case occurs in the court of public opinion,
25:46
but in the previous one, which was Google search dominance. Yes,
25:50
pretty easy for people to relate to. Almost anyone who's
25:54
used the Internet has used Google Search. A small fraction
25:57
of Internet users have used Google advertising technology, and so
26:03
I don't think everyone's quite aware of just how much
26:05
Google dominates this space, which is in part by because
26:09
of their dominance in search.
26:11
Speaker 2: Yeah, the way that Google's ad platform works, if you're
26:13
not familiar with it, it's really simple. You go and
26:17
create an account for Google Ad Manager, and you say,
26:21
here's my budget for the month, here are the types
26:25
of ads that I'd like to run, and here are
26:27
the people that I'd like to try to target. And
26:31
Google does all the rest of the work. Your ads
26:33
show up wherever. They determine algorithmically that your ads are
26:37
going to go, and it's based on what you say.
26:39
And then it's also based on the other side, which is,
26:42
let's say I'm a website. I say, hey, here are
26:45
the people you know, here's my demographic, and here are
26:47
the kind of ads I want to run, and Google
26:50
provide me with, you know, the ads that are appropriate.
26:53
So if I'm using Google Ad manager. I don't go
26:56
and say, hey, I want these ads to run on ESPN. No,
26:59
if I want to do that, I just go to
27:01
ESPN and say I want to buy ads on your website. Rather,
27:04
it's this huge programmatic ad buy that just goes out
27:07
into the ether and ends up wherever. The problem with
27:12
it is it really has become the default way that
27:17
ads are placed online at this point. And a lot
27:21
of this stems from and I've talked about this a
27:23
lot in our show from Google bought a company back
27:26
in two thousand and eight called double Click, who is
27:28
the biggest ad market place in the time on the planet,
27:34
and Google signed an agreement with I forget if it
27:36
was the DOJ or the FTC, but they specifically said, look,
27:40
we are not going to merge double Click with Google's
27:44
ad program because it would be too hard and too complicated.
27:47
And that was one of the reasons why the government said, okay,
27:50
you can do this. Less than three years later they
27:53
announced they were integrating the two platforms. And now here
27:57
we are thirteen years after that, and it's like.
27:59
Speaker 3: Finally the governments do something about it.
28:00
Speaker 2: Yes, So this is something that again is kind of obscure,
28:06
but It all dates back to that purchase of double
28:09
click back in two thousand and eight and the integration
28:12
of the marketplace with the with basically the rest of
28:16
Google's business, uh and all of the data that Google has.
28:20
Speaker 3: It's interesting that it is happening at a time, by
28:22
the way, where I think you might be able to
28:24
argue that Google's influence in this ad space is waning
28:27
a little bit, right Like Amazon and Meta are picking
28:30
up some space, even Apple is, and so you know,
28:34
the lawsuit comes at Look, it's you know, it's Google,
28:37
So let's not be too concerned about them. But they
28:40
just lost an anti trust case, and their influence in
28:42
the ad space Argua inarguably is is waning a little
28:46
bit with some of their you know, big pocketed peers
28:50
taking some.
28:50
Speaker 2: Let's take a quick break here. When we come back,
28:53
Stack Roulette.
28:55
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29:53
Speaker 2: What do you got for me for stack?
29:55
Speaker 3: Roule at Mike Grocery prices everyone the bane of everyone's existence.
29:59
I spent good. I'll tell you every time I go
30:02
to market Basket, which isn't as frequently as I would
30:04
like because they just aren't located as close to me
30:07
as as I would like. But I was on my
30:08
way home from a weekend away and I stopped at
30:10
market Basket, and I spent a good three hundred and
30:12
eighty dollars at market Basket, which is tough to do
30:15
given everything shallots, the whole store, the whole store. But
30:20
that's I mean swordfish for eleven bucks, like anyway. They
30:23
love Market Basket. Favorite grocery store in New England, hands down.
30:27
But grocery prices are up. I'm trying to remember the
30:31
exact statistic, but it's high twenty percent range since pre
30:34
COVID they outpaced the overall range of inflation, which obviously
30:39
includes grocery prices. And so a lot of people are wondering,
30:42
what the hell's going on? Why groceries? Why is this
30:45
the main issue? I know, we had the Ukraine War
30:48
drive up food prices. We've had obviously inflation and wages,
30:52
and this is a it's a fairly labor heavy industry
30:56
when we talk about, you know, the manufacturing and production
30:59
of food. But greed has also been brought up, and
31:02
I think, you know, the Kroger CEO stepped in a
31:05
little bit when in March he wrote that the supermarket
31:07
chain's milk and egg prices were significantly higher than was
31:10
necessary to account for inflation. NPR interestingly took a look
31:14
at profit margins for companies financial disclosures, specifically in the
31:22
item makers, So you know Mandal's Pepsi Proctrick gamble. They
31:26
basically found that. Look, for almost all companies that we
31:30
analyzed between twenty eighteen and twenty twenty three, profit margins
31:35
either declined or grew by less than one percent. So
31:39
if you're trying to put your finger on the hey,
31:43
what's going on here with grocery prices and lawmakers, you know,
31:47
talking about blocking the Kroger Alberson's merger. I mean, maybe
31:52
the markups are occurring at the grocery store chains and
31:54
that's where the greed's coming in here, But it's clearly
31:58
still a very competitive mark market for grocery suppliers, I
32:01
think is the takeaway here. And I just don't find
32:05
corporate greed to be a satisfying explanation of pretty much
32:10
anything in the way of prices, unless they operate a monopoly.
32:13
Speaker 2: Even then, I'm not sure that it like it's.
32:16
Speaker 3: Yeah, look, it's nice to it's a nice scapegoat, but
32:20
it just doesn't really add up.
32:21
Speaker 2: Here's the thing. Company I've said this before, companies didn't
32:27
wake up in twenty one and say, hey, Mike, have
32:32
you heard of greed? Do you think we should get greedy.
32:36
Should we try this is greed something we should be doing.
32:39
That's that's not how it works. Companies, I'm of the opinion,
32:43
especially in the last two thousand years three thousand years,
32:48
have been greedy. It's like it's baked into humanity. It's
32:54
it's something that we have to try to fight against
32:57
because all of us have that a little bit. And
32:59
company are greedy like they just are. I'm sorry, but
33:04
it's the case. I know it's cynical, but they've always
33:08
been this way. And so if it were purely, oh like,
33:10
corporate greed, why didn't it show up any other time
33:13
in the last forty years.
33:14
Speaker 3: Yeah, I mean, look, there is definitely a compelling case
33:17
that Americans were more willing to accept price hikes over
33:20
the last three years compared to the twenty tens decades.
33:23
That's definitely the case. But unless you're telling me that, hey,
33:27
you know, Kroger and Roach Brothers and Market Basket don't
33:32
need to compete with each other and are colluding on prices,
33:35
then I just don't think you have a compelling case
33:37
for greed being the problem here.
33:38
Speaker 2: No, no, I concur either of you follow the PWHL's
33:44
inaugural season last year. No, this is the Professional Women's
33:49
Hockey League. They had six teams and they basically all
33:51
just launched without any branding, just because the thing came
33:54
together pretty quickly.
33:55
Speaker 3: Yeah. I was talking to somebody about this, and I
33:56
assume that they're going to start selling off some because
33:58
it was I mean, what was the name of the
34:00
Boston team, Boston? It's just yeah, Boston.
34:03
Speaker 2: Yeah. They announced the branding of the six teams today
34:09
and I think that they name wise, I think they
34:12
hit on five of the six Boston and he guess
34:16
is to what the Boston team is named? Fleet? Thank
34:19
you for already googling at Tucker. It's the Boston Fleet,
34:22
the Minnesota Frost, the Montreal Victoire, which I just think
34:26
is very clutch, the New York Sirens, the Ottawa Charge,
34:31
and the Toronto Scepters. So the only one that I'm
34:34
not sure is that the Ottawa Charge, Like it's just
34:36
kind of like, I don't know where does the team
34:38
play out of in Boston against Arena and Lowell? Okay,
34:44
your songs Arena Songus, Boston Songus, Rene and Lowell, And
34:49
so they also you know that showed all of the
34:51
logos and everything. So the Boston team, the logo that
34:56
they did for them, I love it for one reason,
35:00
but two separate reasons. Within it, it's this like stylized
35:04
anchor like B that looks like an anchor, kind of
35:08
a B that looks like it. It's like a sideways anchor,
35:11
like a sideways anchor, Okay, but if you rotate it,
35:14
it's a direct throwback to the Hartford Whaler's logo, like
35:17
the bottom of it. So I love it because a
35:20
it's kind of embracing some of the hockey heritage of
35:22
the New England region. But it also kind of tweaks
35:25
the Hartford fans who are like, hey, our team like
35:30
got we got hosed on this. Hey maybe this is
35:32
where you can you know, kind of go to, you know,
35:35
find your new team. But I think they they nailed
35:38
most of these. The only one where the logo's kind
35:41
of questionable to me, Tucker, I don't know if you're
35:43
you're looking at all these the New York Sirens logo.
35:47
It's Sirens with with kind of these blue echoes on
35:50
the side of it.
35:51
Speaker 3: It looks like the serious XM logo. For the record,
35:56
I was picturing a buzzing bee. Not the letter B.
35:59
Speaker 2: No, it's the letter B, the letter B. But yeah,
36:03
So the second p WHL season is going to be
36:05
kicking off soon with some new team names. So exciting
36:08
stuff there. Quick break for the rest of the day.
36:10
We'll see you tomorrow though,